August 14, 2014

A COUPLE TWEAKS:

[T]he proposal contained herein--dubbed the Universal Exchange Plan ("the Plan")--seeks to substantially repair both sets of health-policy problems: those caused by the ACA and those that predate it. It is the latter set of problems that have denied affordable, high-quality health care to millions of Americans, while presenting the government with crushing health care bills.

The Universal Exchange Plan's reforms are perfectly compatible with the "repeal and replace" approach, but they do not require the full and formal repeal of the ACA in order to be enacted.

The Universal Exchange Plan would introduce major changes to the broad set of federal health care entitlements: Obamacare, Medicare, and Medicaid. While the Plan is compatible with the "repeal and replace" approach favored by Republicans, it does not require the formal repeal of the Affordable Care Act. Indeed, the Plan uses a reformed version of the ACA's health insurance exchanges as the basis for far-reaching entitlement reform.

The Plan would repeal many of the ACA's cost-increasing insurance mandates, including the individual mandate. But it would preserve the ACA's guarantee that every American can purchase coverage regardless of preexisting conditions. And it would utilize the concept of using federal premium support subsidies, on a means-tested basis, to defray the cost of private health coverage.

It would gradually migrate most Medicaid recipients, along with future retirees, onto these reformed exchanges. This change would dramatically increase the quality of health coverage offered to Americans at or below the poverty line, and preserve the guarantee of health coverage for low- and middle-income seniors, while ensuring the fiscal sustainability of both federal health care commitments. The Plan proposes minor changes to the treatment of employer-sponsored health coverage, while giving workers additional tools to lower their health care bills. It would curb the pricing power of hospitals, cap malpractice damages, and accelerate medical innovation.

Taken together, these changes could usher in a new era of consumer-driven, patient-centered health care.

According to our estimates, the Universal Exchange Plan would, by 2025, increase the number of U.S. residents with health coverage by 12.1 million, relative to the Affordable Care Act. Over time, we project that the Plan would outperform the ACA by an even wider margin.

The Plan would also expand economic opportunity for those struggling with high medical bills. It would improve the quality of health care delivered to the poor, and put America's finances on a permanently stable course.

The plan has its roots in real-world examples of market-oriented, cost-effective health reform. Notably, two wealthy nations--Switzerland and Singapore--spend a fraction of what the United States spends on health care subsidies; yet they have achieved universal coverage with high levels of access and quality.

In 2011, the Singaporean government spent $851 per capita on health care: less than a quarter of what the U.S. spent, adjusted for purchasing power parity. Singapore has achieved its savings using a universal system of consumer-driven health care. The government funds catastrophic coverage for every Singaporean, and reroutes a portion of workers' payroll taxes into health savings accounts that can be used for routine expenses.

The dirty secret of health care reform is that everyone wants universal health care, but almost no one needs it. What we should all have is coverage. So you combine that coverage (a catastrophic plan) with a health savings account and you've tricked fols into building the sort of wealth that means they won't be a burden when they actually need health care.